Top-Down Solutions Like Holacracy Won’t Fix Bureaucracy

For all its enemies, bureaucracy is amazingly resilient. Since 1983, the number of managers, supervisors, and support staff employed in the U.S. economy has nearly doubled, while employment in other occupations has grown by less than 40%, according to our analysis of data from the Bureau of Labor Statistics. That makes bureaucracy the organizational equivalent of kudzu, the invasive, herbicide-resistant vine that has overrun thousands of acres of woodland in the American south.

Why is bureaucracy so difficult to eradicate?

First, it’s familiar. Bureaucracy is the managerial operating system of virtually every medium- and large-scale organization on the planet. Because bureaucracy is everywhere, and everywhere the same, it is widely regarded as both necessary and inevitable.

Second, there are millions of managers who have a vested interest in perpetuating the status quo. Bureaucracy is a massive, multi-player game and those who excel at it are typically unenthusiastic about changing it. Someone who’s invested 30 years in acquiring the power and privileges of an executive vice-president is unlikely to look favorably on a proposal to downgrade formal titles and abolish the link between rank and compensation.

Third, there’s no well-trodden path for building a post-bureaucratic organization. While one can draw inspiration from companies that are famously non-bureaucratic, like Morning Star, the California-based tomato processor, and W.L. Gore, the high-tech materials company known for its Gore-Tex fabrics, these companies developed their distinctive management practices over decades. While there’s much to learn from these and other vanguards, any bureaucracy-bound organization that wants to overhaul its management model will have to invent its own map. The challenge is not unlike that faced by the first surgeons who attempted to transplant human organs: the stakes were high and the protocols few.

Finally, bureaucracy is hard to root out because it works — sort of. All those bureaucratic structures and systems serve a purpose, however poorly. To simply excise them would create chaos. Imagine what would happen, for example, if an organization decimated the ranks of middle management without equipping front-line employees with the skills, incentives, and information they need to manage themselves. Dismantling bureaucracy is less like tearing down an old building and erecting a new one in its place, and more like doing a ground-up restoration with sufficient care so the building never collapses on top of you.

Given all this, any grand, top-down program for supplanting bureaucracy will almost surely fail. Look what happened when Zappos, the online retailer, tried to replace bosses with interlocking decision-making groups or “circles.” While the goal was laudable — to eliminate managers and organizational politics — the all-or-nothing implementation of this new and mostly untested management model left Zappos in turmoil. Staff turnover jumped to an unprecedented 30%, and many of those who remained were confused and demoralized. In 2016 Zappos fell off Fortune magazine’s Best Places to Work for the first time in eight years.

Beating bureaucracy isn’t just one more re-org. What’s needed is an approach that’s emergent, collaborative, iterative, and inescapable; one that “rolls up” rather than “rolls out;” something more like an open innovation project and less like Mao’s cultural revolution.

In recent years, organizations as diverse as Ford, Netflix, and Google have used hackathons to invent new products and solve thorny operational problems. (Facebook’s ubiquitous “Like” button grew out of a hackathon.) In a hackathon, teams compete to come up with novel solutions and the most promising are then fast-tracked to implementation. How might such an approach be used to defeat bureaucracy?

Imagine an online, company-wide conversation where superfluous and counter-productive management practices are discussed and alternatives proposed. The output of such a conversation wouldn’t be a single, elaborate plan for uprooting bureaucracy, but a portfolio of risk-bounded experiments designed to test the feasibility of post-bureaucratic management practices.

For example, a hack might propose that front line teams be given the right to interview and select new hires — a task heretofore performed by department heads or HR staff. Such an idea could be quickly tested in a small corner of large organization. Within a month or two one would know: Can we do this efficiently? Can the legal risks be mitigated? Does this produce better hiring decisions? Does it boost team morale?

Now imagine a large organization running dozens of such experiments concurrently. Some hacks would fail, but the best of the rest would be replicated by units eager to reduce the costs of bureaucratic drag.

Critically, an open, meritocratic approach would minimize the ability of a few obstinate leaders to block promising ideas. Nevertheless, even with an open approach, care must be taken to develop a migration path that allows tradition-minded leaders to grow into new roles. In post-bureaucratic organizations, authority depends on one’s ability to attract followers, not on one’s title. Decisiveness, superior information, and credentials are less important than wisdom, integrity, collegiality. For many leaders, this represents a daunting transition. They will need mentors and coaches to help them retool. Though potentially expensive, this investment is warranted. You can’t build a human-centered organization by leaving behind those who find the transition discomforting.

In our view, there is something inherently contradictory about using authoritarian means to implement a management model aimed at enhancing self-determination. Nothing will sabotage the work of busting bureaucracy faster than an abrupt and ill-conceived move that creates organizational upheaval and unites opponents.

Bureaucracy didn’t burst forth fully formed 150 years ago. It emerged gradually as the product of relentless experimentation — and that’s how progressive organizations will chart a course to a post-bureaucratic future. Revolutionary goals, evolutionary steps — that’s the recipe.